Banking 2.0 getting closer -- Number26 launches in six new European markets

Traditional banking is arguably following a broken model. Innovative startups like Number26 are showing them a new way.

ubs bank england

Commuters pass the offices of Swiss financial company UBS, on April 1, 2008 in London, England.

Credit: Thinkstock

In my opinion, banking is one of those industries which is soon to undergo a revolution as new technologies, consumer demand, a drive for efficiency and relaxing regulations all conspire to make banks' traditional models uneconomic and eventually untenable. Banking 2.0 is a general term used to describe a new way of looking at an old business -- one which leverages connectivity, cloud computing, the role of social networks and a more customer-centric view of the world to deliver better products and services.

I've done a bunch of consulting in the banking industry and have often been frustrated at the lack of innovation and agility within the systems. Those within banks like to blame government regulation for their inability to innovate, but my experience is that it has to do more with risk aversion and the caliber of the people inside -- redesigning retail bank layouts or building new marketing collateral is about as far as they go when it comes to innovation. So much for thinking about banking as an engine around which an ecosystem of third-party products and offerings can be wrapped.

Which is where Number26 comes in. Number26 is a European banking startup that itself was set up by a traditional bank. Wirecard Bank, the German parent company, quite rightly realized that they were unlikely to really move the needle on banking innovation internally, and hence they resourced Number26. What Number26 does is to take Wirecard's existing service and completely wrap it in new experience layer to change the way banking works.

Accounts that are easy to open, the ability to authorize simply by snapping a pic of your passport and no account fees are just some ways in which Number26 differentiates.

Today that differentiation takes another step as the company announced that it is entering into six new European markets. The digital bank will now be available in France, Greece, Ireland, Italy, Slovakia and Spain.

The move sees Number26 further its ambition of creating a borderless bank. Like with Number26's previous offering, in the new geographies, the account is linked with a MasterCard that can be used worldwide to make purchases or receive cash at ATMs without incurring fees. Easier still is signing up for an account, which takes place online via video chat in just eight minutes, or sending money to friends via text message or email with just a few clicks. After every transaction the user receives an instant push notification to stay in full control of their money. Number26 technology is also smart and helps users to keep an eye on their personal finance. All funds are protected under the German Deposit Protection Fund.

"Our vision from the start has been to build Europe‘s first bank account for the smartphone," said CEO and founder Valentin Stalf. Not pulling any punches, he continued saying that, "We see traditional banks as having failed to adapt to the demands of the digital generation. The response to Number26 has been fantastic and we‘re thrilled to expand to further markets."

Of course there are many that would suggest that by building itself on top of a traditional bank, Number26 isn't able to really revolutionize the banking system as much as it would like. It still has the constraints that a traditional organziation brings. But that view needs to be balanced with the fact that customers want a degree of certainty and security and that Wirecard brings this to Number26. 

This geographic expansion is a positive sign for Number26 -- it will be interesting to see whether they manage to grow beyond Europe in their quest to reinvent banking.

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